Late payments improve despite IT sector deterioration

Experian research finds UK businesses paying more promptly on average in Q3, but IT firms see problem worsen

IT was one of the few industries to see its late payments problems worsen in 2012's third quarter as UK companies were paying their bills an average of a day and a quarter earlier than in the corresponding period last year.

Figures from Experian find that UK plc made its payments on average 24.88 days beyond agreed terms, compared with 26.17 days in Q3 2011. Last quarter's figure does, however, represent an increase on the 23.46 days posted in Q2.

The year-on-year improvements were driven largely by behavioural changes in larger businesses. Firms with 500-plus employees posted an annual improvement of more than 2.5 days, with bills in Q3 paid an average of 32.18 days late. For businesses with 101 to 500 staff the Q3 figure was 22.78 days, an improvement of more than three days.

The IT industry was one of the few verticals to show an increase, with tech firms coughing up an average of 25.19 days late in Q3, compared with 22.73 in the year-ago quarter and 21.66 in Q2 2012.

Agriculture, forestry and fishing firms remain the promptest payers, settling their debts 10.72 days beyond agreed terms. Postal and telecommunications businesses are still way out in front as the tardiest payers, waiting an average of 46.87 days after their bills are due.

The regional breakdown shows that the south west remains the standard bearer, with bills being paid 17.59 days after agreed terms. The north west is very much the laggard, with debts settled 32.66 days late.

Max Firth, UK managing director of Experian's Business Information Services division, said: "It is encouraging to see that the gap between payment performance of the biggest and smallest businesses has continued to close. This is a sign of improved behaviour among larger businesses. Understanding how quickly clients are paying their invoices provides firms with an early warning sign of potential issues, so that they can plan for any debt or work with firms that are struggling."

"The Q2 to Q3 change, however, does indicate potential cashflow issues in recent months," he added. "For firms trying to keep their books balanced, having a full and early view of all the factors that could impact their business, whether it is late payment or insolvency, could be the difference between staying afloat and going under."